UK 
United States
Written by Lynette Silva Heelan, Workhuman’s EMEA Consulting Practice Leader
With the double whammy of a rise in the national minimum and living wage in 2025, alongside an increase in employers’ national insurance and pension contributions, employers across the UK will be facing tighter budgets. At the same time, global events and economic uncertainty have added extra pressure on workers' wellbeing and stretched HR budgets even further.
As a result, HR leaders will need to do more with less. AI-powered HR tech solutions are becoming a lifeline, helping by automating routine tasks and using generative AI to boost creativity and productivity, ultimately saving costs. However, there are some limitations when it comes to using AI for more strategic HR goals.
While AI is already being used to track basic data like employee holidays or salary information, these insights may not be as useful for measuring employee engagement and experience, workplace culture, or assessing the ROI of wellbeing programmes. According to Gallup, poor employee engagement costs businesses £6.9 trillion, so the real question is, how can AI help address this while helping HR keep their costs low?
Investing in the right AI
While promising, AI tools are only as effective as the data they're trained on. With current budget constraints, HR leaders need to make smarter choices when selecting technology, focusing on solutions that offer real, measurable benefits. The right AI tools should not only automate routine tasks but also provide valuable, people-focused insights that can guide better decision-making.
Yet, this is where many HR solutions fall short. Finding tools that deliver meaningful data has been a challenge, especially with limited budgets, leaving HR leaders with little room for experimentation.
This is where investing in tools with multiple benefits becomes crucial. By selecting HR-tech solutions that not only improve employee engagement and reduce turnover costs, but also provide actionable people data, HR can make smarter, cost-saving decisions. These tools can help identify areas for improvement, predict turnover, and optimise talent management (especially during the skills-based organisation revolution), ultimately helping HR achieve more with less.
Employee recognition as a strategic data tool
Recognising employees for a job well done is a powerful tool for saving money. When employees are recognised for their efforts, they are more engaged, less likely to leave, and less prone to burnout, all of which can reduce costs for the organisation. For example, in a 10,000-person company, implementing a strong recognition culture can save up to £12.8 million annually by reducing employee turnover.
Beyond motivation, employee recognition also provides valuable data. A simple "thank you" sent through a recognition platform is rich in data about how an individual engages with their organisation and their peers and can highlight important skills like problem-solving and proactivity. For example, a message like, "Your innovative approach to solving the client issue last week was outstanding and really impressed the team," goes beyond superficial praise, it paints a clear picture about an employee strength. By analysing this recognition data, shared voluntarily in the giver’s non-anonymous, authentic voice, AI can assist HR teams in identifying top performers, even measuring loyalty and spotting emerging leaders.
AI can also help catalogue skills and competencies across the organisation, allowing HR teams to support employees in their growth, which in turn helps retain talent and optimise performance. This saves HR time and money by replacing the need for endless outdated performance reviews and reports.
In short, combining employee recognition with responsible, human-centred AI boosts employee engagement and experience, reduces turnover, and increases productivity. Plus, the data is unique to each organisation, making it even more valuable for HR leaders who need to ensure their people and culture efforts are delivering the ROI they need.
Where human meets data: the next stage of AI
AI has already changed the way we work, and now it’s set to transform HR, giving leaders the tools they need to become more strategic. With AI, HR can gain insights that boost employee potential and save costs. In 2025, the focus will shift from just analysing data to truly understanding it, improving employee experiences while increasing efficiency.
But to make all this work, HR needs the right tools – and the right tools that can easily communicate to share and consolidate data for the deep insights HR needs to drive real change. Employee recognition platforms are a key solution, offering valuable, people-focused data that helps HR make smarter decisions, while also boosting engagement and retention.
For organisations looking to balance innovation and transformation, cost savings and strategic investment, and a strong workplace culture and people strategy, these tools can be the ideal choice. In a machine-driven world, human, authentic data, voluntarily shared, will be the power behind the insights that drive the decisions of the workforce of the future.
